Telefonica reported higher revenue, improved profitability, stronger ARPU trends, expanding broadband infrastructure, and lower net debt in the first quarter of 2026 as the telecom operator accelerated its “Transform & Grow” strategy focused on digital services, AI, network leadership, and disciplined capital allocation.
The telecom group generated revenue of €8.13 billion in Q1 2026, rising 0.4 percent. Adjusted EBITDA increased 1.8 percent to €2.84 billion, while adjusted operating cash flow after leases (OpCFaL) grew 2.4 percent to €1.38 billion.
Telefonica said the performance keeps the company on track to meet its full-year 2026 guidance, which includes revenue and EBITDA growth of 1.5 percent-2.5 percent, adjusted OpCFaL growth above 2 percent, and free cash flow of around €3 billion.
Telefonica’s consumer business remained the largest revenue contributor. The residential B2C segment generated €4.81 billion in revenue, accounting for 59 percent of total sales and growing 1.5 percent in constant currency.
Telefonica’s B2B enterprise division delivered stronger momentum, with revenue rising 5.7 percent to €1.93 billion, representing 24 percent of group revenue. Wholesale revenue declined 7.4 percent to €1.39 billion.
In Spain, Telefonica delivered accelerated growth with revenue increasing 2 percent to €3.23 billion and adjusted EBITDA also rising 2 percent to €1.15 billion. The company highlighted strong customer metrics, including ARPU reaching €91.5 and churn declining to a record-low 0.7 percent. Telefonica Espana’s mobile contract subscriber base surpassed 16 million for the first time, while IoT connections exceeded 25 million, quadrupling compared with March 2025.
Brazil remained one of Telefonica’s strongest-performing markets. Telefonica Brazil, operating under the Vivo brand, reported revenue growth of 7.4 percent and adjusted EBITDA growth of 8.7 percent, outperforming inflation levels in the country. The operator reached a record 117.5 million accesses, while its Vivo Total convergent broadband and mobile offering expanded to 3.6 million accesses, representing annual growth of 33 percent.
In Germany, Telefonica Deutschland continued to face pressure from the customer migration of 1&1, which affected revenue and EBITDA performance. However, the company added 48,000 net mobile contracts during the quarter and maintained low O2 churn of 1.1 percent through a strategy focused on profitable growth and network quality improvements.
In the UK, the group said Virgin Media O2 continued selective network investments to strengthen its value proposition while remaining on track to meet its 2026 financial forecasts.
Telefonica also accelerated its strategic restructuring in Latin America. During the quarter, the company completed its exits from Colombia and Chile and later signed the sale agreement for Telefonica México, subject to regulatory approvals. The divestment strategy is designed to simplify operations and improve long-term financial efficiency.
The telecom operator maintained disciplined capital expenditure and operational spending during the quarter. Capex stood at €866 million, down 1 percent year-on-year in constant currency, resulting in a capex-to-revenue ratio of 10.7 percent, within the company’s annual target range of around 12 percent. Telefonica emphasized that its investment strategy prioritizes high-quality fibre and 5G infrastructure while supporting digital transformation initiatives and AI-driven technologies.
Telefonica continued to strengthen its broadband leadership globally. Total accesses increased 5.3 percent year-on-year to 297.9 million. Fibre-to-the-home (FTTH) accesses grew 8.6 percent to 14 million. The group now passes 162.7 million premises with ultra-fast broadband networks, including 74.9 million FTTH premises passed, reinforcing its position as one of the world’s largest fibre operators.
The company also expanded 5G network coverage across its core markets. Telefonica now provides 5G coverage reaching 95 percent of the population in Spain, 98 percent in Germany, 70 percent in Brazil, and 87 percent in the UK, averaging 81 percent across its four major markets.
From a financial strategy perspective, Telefonica significantly reduced leverage during the quarter. Net financial debt fell by nearly €1.5 billion to €25.34 billion, improving the debt-to-equity ratio to 2.72x. Adjusted net income from continuing operations reached €482 million, although the group reported a net loss of €411 million due to losses linked to discontinued operations and Latin American divestments in Chile, Colombia, and Mexico.
Telefonica COO Emilio Gayo said the company’s Q1 performance reflected “continued and consistent execution” supported by strong business fundamentals, disciplined investments, premium network quality, and enhanced customer experience.
The company’s broader digital strategy under the “Transform & Grow” plan focuses on becoming a leading platform for digital technologies, supporting enterprises, governments, and consumers with connectivity, AI-enabled services, cloud solutions, IoT, cybersecurity, and next-generation broadband infrastructure.
BABURAJAN KIZHAKEDATH
